When Considering a Condominium Purchase, Check How Long the President Has Ruled the Roost

If you are looking for a condominium that you’ll feel comfortable with, check how long the current board has been in power. If the board doesn’t turn over, it’s the same names year after year, then add additional caution when purchasing in the condominium or HOA.

I’ve read, and had some personal experience, about too many “lifer presidents” (an example here) that over time begin to treat the board as their exclusive play grounds. Where most elected bodies recognize the threat to good governance elected lifers create – even the President of the United States has term limits – no such measures exist for community associations.

The risk is, and it seems to come to fruition, that over a period of time the basic principles of the board get eroded.

Take for example the board of President Lorraine Walsh, who has held her title for over 20 years at the Deveonwood, Hercules California, condominium. According to one resident the board hasn’t held an election since 2005. Further, though there is a vacancy on the current board and an owner volunteered to fill it till next election – the current board voted down the appointment 4 to 0.

Other shenanigans appear to be happening there as well: holding in camera executive sessions in the middle of public meetings. That’s clearly a method to shut down the meetings.

Often long serving boards tend to use fining as a heavy handed method to enforce compliance, or threaten owners financially if they raise trouble. For the Deveonwood, first time violations carry $350 fines and have been handed out for improper window coverings and poor garden pot locations.

Sometimes I wonder if the property management firms hired by these long term boards are somewhat responsible for the condominium’s or HOA’s decline. If there really hasn’t been an election since 2005 the property management company should resign or make public notice that the board is failing to abide by all rule and regulations. The problem is management companies can fear failing to comply with the board will result in a non-renewed contract. It’s hard to protest the board that pays you. For the Deveonwood, one owner appears to have asked for the record of past elections to confirm when and how the last elections were held, and the management company denied to fill the request.

Condominiums are great places to live, but like any organization they benefit deeply from a regular turnover of the board, and a rotation of the roles. There is nothing scared or amazingly difficult about being on a board, and normally a management company will ensure all the i’s are dotted and the t’s crossed. I have yet to see a new board, with none of the old guard remaining, mess up a community.

Using Conflict of Interest to Generate Money and Prison Time

When I teach the 101 Board Education course for the Canadian Condominium Institute of South Alberta, I comment several times that board members should always avoid conflict of interest.

Conflict of interest for those who may not be clear on the term:

A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other (Wikipedia).

Note that a conflict of interest doesn’t even need to a realized corruption, but just the possibility. For boards, common conflicts of interest include voting on contracts with bidders that include family, friends, and business partners. It also includes board members doing services for the condominium and receiving remuneration.

For a group in Las Vegas – they saw being in a conflict of interest as a process to profit. They hatched a scheme.

They recruited individuals who they gave money to buy units in condominiums. In return, the individuals were asked to run for the board and once on, direct legal and construction work for the condominium to companies designated by the group who fronted the cash. Just to make sure the scheme worked, board elections were rigged, and ballots were forged.

So far, one of the people fronted money – Steven Wark – will be facing a maximum sentence of 30 years for his participation in the scheme (and pay more than $94,000 in restition).  The reason: after he was elected to the Vistana homeowners board he took payments and voted “in a manner directed by and favorable to his co-conspirators.”

That would very much be a conflict of interest.